The answer to this question can be very complex and you need to see a tax attorney to fully answer it. However, the basics are as follows:
The taxpayer can give $14,000.00 of a present interest in an asset to each individual, and some trusts, and it will not reduce the $5,490,000.00 lifetime gift tax exclusion (its $5,000,000 as adjusted for inflation. For 2017 the excluded amount is $5,490,000). Thus, if you gave $14,000 to 100 different individuals then you would have no gift taxes. However, if you gave $10,000,000.00 to one person, then you would owe gift tax on ($10,000,000.00 -$5,490,000 -$14,000.00 (annual exclusion) )= $4,496,000 in 2017.
If a taxpayer dies and the value of the taxpayer’s gross estate, plus adjusted taxable gifts exceeds $5,490,000 in 2017 then the taxpayer’s estate must file a United States Estate (and Generation-Skipping Transfer) Tax Return commonly referred to as Form 706. Annual exclusion gifts can be an important part of planning to reduce estate taxes especially for older taxpayers. For more information about estate planning to reduce transfer taxes, contact Matthew A. Linde, P.A. today.